Tag Archives: performance royalty

News Corp owned MySpace will purchase independent online music service Imeem, in a deal which is reported to be $1million in cash. Imeem has been in financial trouble for a while, and has run through an estimated $30million in investor dollars.

Among the investors, all four major record labels, although earlier this yearWarner Music wrote off its investment in the service. In 2007, Imeem became the first ad supported on-demand online music service to negotiate deals with all four major labels. Those deals included equity which made partners of the four major labels. MySpace also has partnership deals in place with the four major labels.

A few months ago MySpace acquired online music service iLike, with 50 million registered listeners, for a reported $20million. Comscore estimated that Imeem had 16 million unique visitors in September. It’s impossible to compare these two numbers except to say that it doesn’t sound like Imeem is a lot smaller than iLike to me.

MySpace now owns two of the five online music services that announced partnerships with Google’s new music platform. The way that works is that Google drives traffic to partner sites who play the music and pay the royalties.

Recently Spotifydelayed their US launch due to problems negotiating a license for ad supported on demand streaming with the record companies. Plug that info into the fact that Imeem was about to get acquired by MySpace for so little, and it’s easy to understand why Spotify is meeting with some opposition. Seems like the record companies want to limit their exposure on the ad supported revenue model…

Last week at the NAB Radio Show in Philadelphia, RAIN hosted a side channel of digital audio related programming in the form of three short panels and a few quick presentations. I spoke on a panel hosted by Dan Halyburton of RadioTime, along with Les Hollander of Pandora, and Matt Sunshine of Center for Sales Strategy. We talked about the business side of Internet radio, and considered the impact of mobile, measurement, and the future.

One of the “vignettes” at the Summit featured SoundExchange’s Jon Simson and Bryan Calhoun. The discussion by SoundExchange was interesting for a couple of reasons. After battling with streaming stations for years over performance copyright issues centered on rate, reporting, and compliance, they came to offer an olive branch, of sorts. Simson took the time to explain how hard they strive to find every last performer and send them every dollar they deserve of the fees online stations are streaming. He told a few anecdotes of finding old artists that made it personal and real, and that was a good thing. SoundExchange even sponsored the event, which was held in a private room at the Hard Rock Café next to the convention center.

The conversation took a brief, weird turn when Simson warned the crowd that now that rates are settled SoundExchange expects compliance and payments. He even called out one broadcast company for their failure to adhere to the rules, which I though was both antagonistic and counterproductive in terms of the goodwill they apparently intended to convey. Nonetheless, it was a unique moment in the history of Internet radio – the friendliest gesture I’ve seen from the record label side of things, and I’m glad I didn’t miss it.

Last week, “Pureplay” webcasters and Sound Exchange came to agreement on royalty rates for the use of sound recordings by Internet Radio stations for the period from 2006-2010. The deal, and analysis of it’s benefits, have been well summarized by David Oxenford (the attorney that represented the webcasters) here, and by Kurt Hanson, Publisher of RAIN: The Radio and Internet Newsletter on his blog.

As Hanson explains, the deal benefits “webcasters who … who have aspirations of earning more than $1.25 million in revenues per year — but are not wholly-owned divisions of multi-billion-dollar companies (e.g., AOL & Yahoo and CBS & other terrestrial broadcast groups). Those webcasters, and some of the known parties in the group, are Pandora, AccuRadio, Digitally Imported and Radioio.

Like the deal negotiated by broadcasters with Sound Exchange earlier this year, this agreement saves these webcasters from further costly CRB (Copyright Royalty Board) negotiations, establishes performance royalty rates that are lower than the rates established by the CRB, and gives smaller webcasters fixed percentage of revenue rates until they hit annual revenue marks somewhere over a million per year.

While there are critics, there’s no doubt that this deal benefits the certain group that participated in the negotiations, giving them relief from CRB-established rates. Congrats to David Oxenford, Kurt Hanson, Joe Kennedy, Ari Shohat, Mike Roe, and others who participated in the negotiations – I know from previous experience that it’s a long and frustrating process. More importantly, it’s a very expensive process – other webcasters that benefit from this option owe thanks and perhaps more to the companies that stepped up to get it done.